Howmet Aerospace Inc.

With its earnings just around the corner, it is interesting to look at how Howmet Aerospace has been performing in recent times. The company exited the last quarter with a strong acceleration in revenue despite the choppy backlog. Commercial aerospace was up in the quarter. Commercial transportation, which impacts fastening systems and forged wheels, was up in the quarter, driven by higher volumes and higher aluminum prices. The recovery continued, driven by engineered structures, engine products, and narrow-body recovery. EBITDA and revenue continued to improve for the sixth consecutive quarter. Fastening Systems, Forged Wheels, and Engineered Structures revenue were higher as well. Free cash flow conversion is strong despite the inventory build. Defense Aerospace was up, driven by customer inventory corrections for F-35. The demand for F-35 is now strong. The industrial and other markets, including general industrial, oil and gas, and IGT, was essentially flat for the quarter. It was also a solid quarter for engine products. Material and inflationary costs remain volatile. Its liquidity continues to be strong. We give Howmet Aerospace a ‘Hold’ rating with a revised target price.